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FORECLOSURE PROCESS MUST ACCELERATE TO MINIMIZE DAMAGE, FED STUDY FINDS FORCEUPDATE FIVE STAR'S FORCE TAKES CENTER STAGE AT 2012 FIVE STAR CONFERENCE Five Star Conference and Expo in Dallas. With more than 450 in attendance, the second annual FORCE Rally presented members with infor- mation on ways to build and diversify their busi- nesses by adding BPO, property management, and short sales to existing REO opportunities. More than 60 of the industry's leading servicing shops and service providers were also on hand, offering members significant opportunities for networking with default servicing's heavy hitters. The event began with FORCE members The FORCE took center stage at the 2012 Reserve Bank of Atlanta suggests foreclosures may not negatively impact nearby property prices as much as originally thought. The paper examines and refutes the A working paper released by the Federal moratorium would do nothing but draw out the delinquency period, making the problem worse. "Our results suggest that the key to argument long used by experts that mortgage foreclosures greatly reduce the sale prices of properties in the area. The Atlanta researchers approached the issue using a new dataset that takes into account the stage of the foreclosure process on a property and the property's condition. The Atlanta Fed's paper includes research on seriously delinquent mortgage loans, as well as REOs and the number of properties recently sold by the lender. The study also includes minor delinquencies, defined by the researchers as delinquencies less than 90 days. This approach allows for the possibility that the foreclosure externality (the effect of the foreclosure on neighboring properties) might occur before the process is actually completed. According to the Fed researchers' findings, minimizing the costs of foreclosure is to minimize the time that properties spend in serious delinquency and in REO," the Fed paper states. "On one hand, this implies putting pressure on lenders to sell properties out of REO quickly. On the other hand, and perhaps much less palatably, it implies minimizing the time a borrower spends in serious delinquency, which means accelerating the foreclosure process." The paper argues that the likely explanation for the drop in surrounding home prices is the "investment externality effect," or the tendency of borrowers and lenders to under- invest in property maintenance for a distressed or foreclosed property. As a result, the home falls into disrepair, and nearby prices suffer, according to the Fed researchers. The researchers also dispute the argument while neighboring home prices do tend to sink when a property becomes distressed, the effect is only minor. Furthermore, the effect appears when the borrower first becomes seriously delinquent on the loan and disappears approximately one year after the foreclosure is sold. Because foreclosure externalities peak before the process is completed, the Atlanta Fed concluded that issuing a foreclosure 22 that an increasing supply of foreclosures on the market could give buyers more bargaining power. "If we thought foreclosed properties gaining big-picture insight on the current state of the industry from Herb Blecher, VP of data and analytics at Lender Processing Services. Following the economic industry presentation, servicers representing Chase, First Preston HT, Freddie Mac, Green River Capital, Lender Processing Services, and LRES shared tips for effective networking and offered guidance on how agents and brokers can advance their careers. The last event of the Rally, the Agent/ Servicer Roundtable Exchange, was also the most anticipated. Attendees were provided a front-row seat to gain invaluable information from some of the most seasoned servicing partners in the industry. FORCE members in attendance characterized the event as "incredible" and "extremely valuable." Also featured at the 2012 Five Star Conference and Expo was the premiere of the Five Star Institute's Residential Property Management certification course. Developed in conjunction with Integrated Mortgage Solutions (IMS) as a component of its partnership with the Five Star FORCE, this new certification course received highly favorable reviews. Participants in the course described it as "phenomenal" and "extremely insightful and valuable to my business." STAT INSIGHT were driving down prices by competing with non-distressed sales, then we would expect, at the very least, that the properties in above average condition would have the same effect as properties in below average condition and, indeed, we might even expect the above average properties to generate even more competition," the paper read. Cost of the financial crisis that began in 2007 as measured by lost GDP. $12.8 Trillion Source: Better Markets, a nonprofit group that promotes the public interest in financial reform

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